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OUTER HOUSE, COURT OF SESSION
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OPINION OF LORD PENROSE
in the petition of
CLYDE SOLWAY CONSORTIUM
Petitioners;
for
Judicial Review of procedures implemented by the Scottish
Ministers in determining a contract to be entered into relating to the
Management and Maintenance of the Scottish Trunk Road Network, South West
Unit; and for suspension and interdict
________________
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Petitioners: Glennie, Q.C., Arthurson, Simpson & Marwick,
W.S.
First & Second Respondents: Anderson, Q.C., Shand,
Solicitor's Office for Scottish Ministers, Solicitor's Office for Advocate
General
Third Respondents: Cullen,Q.C., Macroberts
16 January 2001
[1] The petitioners are a consortium of local authorities formed with a view
to tendering for a trunk roads management and maintenance contract to be let by
the first respondents, the Scottish Ministers, in respect of an area identified
as the South West Unit of the Scottish Trunk Roads Network.
[2] In putting the work out to tender, the first respondents required to
comply with the Public Works Contracts Regulations 1991 (S.I. 1991 No 2680), as
modified for application in Scotland following devolution by the Scotland Act
1998 (Consequential Modifications) (No 1) Order 1999 (S.I. 1999 No 1042),
schedule 1 paragraph 20. The 1991 Regulations gave effect to the then current
Directive of the Council of the European Communities concerning the award of
public works contracts, now superseded by the consolidating Council Directive of
14 June 1993 (93/37/EEC).
It was a matter of agreement that there was no material difference between
the provisions of the Regulations applicable in this case and the equivalent
provisions of the Directives in force from time to time, and that the European
jurisprudence relating to the Directive instructed the proper approach to the
interpretation and application of the Regulation.
[3] In accordance with the Directive, the first respondents gave notice in
December 1999, by advertisement in the Official Journal of the European
Communities, of their intention to put the contract and three related contracts
for the remaining trunk roads network areas of Scotland out to competitive
tender. The petitioners and other contractors, including the third respondents,
Amey Highways, responded to the notice.
[4] The notice published by the first respondents in the Official Journal
related to all four contracts. The South West Unit was defined in terms of
specified lengths of named trunk roads covering a total route length of
approximately 672 km. The nature and extent of the works were described as
follows:
"3 (a) Site: It is proposed to let 4 separate contracts in respect of certain
defined units on the trunk road network in Scotland, United Kingdom. The
contracts will apply to the following 4 units...."
The four units were then described in detail which it is unnecessary to
repeat for present purposes. It was then provided:
"(b) Nature and extent of the works ...
4 separate contracts for separate geographical areas of Scotland for the
provision of integrated network management and maintenance activities on the
specified roads within each unit. Each contract includes, inter alia, a
mobilization period, a defects liability period, and a 5-year period for the
provision of integrated network management and maintenance activities, with the
possibility of extension(s) to such 5-year period, for a period or periods not
exceeding a total of 2 years. The approximate works values per annum (turnover)
of the contracts ... are as follows:
....
South West Unit: 26 000 000 GBP..."
It was intimated that details of award criteria would be provided in the
tender invitation documents.
[5] A preliminary selection procedure was carried out which identified the
petitioners, the third respondents and two other contractors as appropriate
bodies to be invited to submit tenders for the South West Unit. The selection
procedure was not contentious in these proceedings, and details of this stage in
the process were not discussed.
[6] The selected tenderers were invited to submit tenders in accordance with
instructions and a form of tender issued by the first respondents. The tender
form included a schedule of defined and numbered work items divided into series.
There were just short of 6,000 separate items. Some of the items called for a
fixed rate or fixed rates for stated periods of work of the appropriate class
over the duration of the contract period. Some called for unit rates for items
of work quantified in terms of volume or lineal or other dimensional extent, but
in respect of which no indication was provided of the total amount of work
likely to be performed under the contract. With the possible exception of the
fixed rate items, the tenders were essentially for a "rates" contract, in
anticipation that the quoted rates would apply to the quantities of work which
required to be performed from time to time during the term of the contract.
[7] Tenderers were issued with an "information pack" containing historical
information about equivalent work carried out over the four year period from1996
to 1999, and directed to an "information room" where further information could
be inspected. I was informed by Mr Anderson for the first respondents that the
current tendering exercise was the first carried out using four contract areas
for the whole country. In the previous round, which included the period 1996-9,
there had been three areas in the central belt, managed and maintained by
operating companies, and five rural areas where the services were provided under
management agency agreements with local roads authorities. As a result of the
accounting systems operated by the different bodies involved there did not exist
a comprehensive record of the quantities of work carried out. The records set
out the cost of the work. The information provided to tenderers for the current
round therefore presented financial information. Tenderers, and the first
respondents themselves, were required by the application of professional skill
and experience to deduce from the financial information the quantities of the
several items of work which had generated the costs. Leaving aside for the
moment the position of the first respondents, it appeared that tenderers making
an assessment of the likely volumes of work in any series of items, or in any
individual item, by reference to the historical data, would have required in the
first place to estimate historical quantitative data by applying information
about rates prevailing over the four base years to the recorded expenditure,
whether that information was already in their possession or collected from
published and other sources, and then extrapolating forward over the anticipated
contract term to determine the total quantities likely to be involved before
determining the rates to be quoted for the individual items, given the
information available to them about the budget constraints which might apply.
There was no requirement on any tenderer to disclose the basis of its
calculation, and indeed no mechanism for so doing.
[8] The instructions for tendering were complex. For present purposes it is
sufficient to take general note of some of the provisions, and to consider
others in more detail. There was provision for inspection of the unit. There was
provision for consultation. Tenderers were obliged to produce outline proposals
for the work: clause 3.6.8. The first respondents were obliged to conduct
consultations with all tenderers to determine the acceptability or otherwise of
the tenderers' outline proposals: clause 3.6.2. There was specification of the
matters to be discussed in the course of the consultation process: clause 3.6.7.
There were detailed provisions regulating the submission of tenders: clause 3.7.
The last date for submission of tenders, as finally revised, was noon on 30
October 2000: clause 3.7.3.
[9] Section 4 of the instructions, so far as material, was in the following
terms:
"4. ASSESSMENT OF TENDERS
- The Assessment Procedure
- This section 4 explains for the guidance of Tenderers the basis on
which the Scottish Ministers intend to assess the Tenders.
- The Contract shall be awarded on the basis of the conforming
Tender, which is the most economically advantageous Tender to the Scottish
Ministers. The Scottish Ministers shall assess the Tenders on the basis of
the assessment criteria specified in section 4.2 of these Instructions for
Tendering.
- For the avoidance of doubt and in order to demonstrate to
Tenderers the transparency of the Assessment Process, The Scottish
Ministers shall notify all Tenderers in writing by post of the base
quantities (which for the avoidance of doubt shall include numerical and
monetary quantities) that they intend to use as part of the assessment
process. ..... The details of the base quantities shall be posted to each
Tenderer on the 30 October 2000. To ensure the probity of the
assessment procedure no Tenders shall be opened earlier than the
30 October 2000. Where there shall be any delay in the posting to
each Tenderer the base quantities referred to earlier in this paragraph
4.1.3. the Scottish Ministers shall not open any Tenders until the day
after the day on which the said quantities were posted to
Tenderers.
- Assessment Criteria
4.2.1 The criteria that shall be used to determine which Tender shall be the
most economically advantageous in descending order of importance shall be as
follows:
(i) (a) Appendices A to I inclusive to the Form of Tender
(b) Appendix G to the Form of Tender ......
(c) Appendix A to Instructions for Tendering - Tender Submission
incorporating Annexes (I) to (xviii) inclusive....
The lowest "overall comparative cost of Tender" resulting from the assessment
procedure carried out by the Scottish Ministers and specified in this section 4
of these Instructions for Tendering utilising the assessment criteria contained
herein applied to the base quantities referred to in paragraph 4.1.3. of these
Instructions for Tendering shall be deemed by the Scottish Ministers to be the
most economically advantageous Tender.
4.2.2 The detail of the assessment criteria that shall be used to determine
whether or not the lowest "comparative cost of Tender" would remain the most
economically advantageous Tender to the Scottish Ministers shall be as
follows:
Variable items
(a) the base quantities referred to in paragraph 4.1.3. of these Instructions
for Tendering shall be varied within the range 70 percent to 130 percent
inclusive for the following Series ...
(There followed a list of base quantities within the variable classes)
(b) the base quantities in paragraph 4.1.3. of these Instructions for
Tendering shall not be varies for the following Series ...
(There followed a list of base quantities within the variable class)
(c) the base quantities shall be varied within the range 0 percent to 130
percent inclusive for the following Series...
(There followed a statement of the items within this class)
...........
Once these "adjusted comparative cost of Tenders" have been established
through the application of the sensitivities within the ranges specified earlier
in this paragraph 4.2.2. the Scottish Ministers shall apply weightings to each
of the "comparative cost of Tender" and to each of the "adjusted comparative
cost of Tenders" after which the sum of each such weighted "comparative cost of
tender" and the "adjusted cost of Tender" shall for the purposes of these
Instructions for Tendering become the "overall comparative cost of Tender"
If, the Scottish Ministers having carried out the sensitivity assessments
equally in respect of all Tenders to establish each "overall comparative cost of
Tender, consider that a Tender has been submitted which because of its pricing
structure could prove to be more costly when compared with other Tenders
assessed on the same basis under any combination of the sensitivity ranges or
weightings referred to within this paragraph 4.2.2, then the Scottish Ministers
may reject such Tender and give it no further consideration even though it may
have the lowest "overall comparative cost of Tender."
It is inappropriate for present purposes to make any general comment on these
provisions or their draftsmanship. I shall comment on them only in so far as is
necessary for the purposes of this opinion.
[10] Queries from interested contractors were entertained by the first
respondents, and General Bulletins were issued to interested parties to answer
appropriate queries. In General Bulletin No 9, the first respondents recorded
the following question and answer:
"Question 31: What is included in the approximate works values per annum as
published in the OJEC Notice?
Response 31: The approximate works value per annum that an Operating Company could undertake is noted below. The values given are dependent upon
certain criteria including but not limited to:
budget availability;
Operating Company performance.
On that basis the approximate range of works values could be as follows:
...
South West £16,000,000 - £26,000,000..."
All of the selected tenderers received the same information on the
prospective values of the works. It is not entirely clear that response 31
provided information of the kind a contractor might reasonably have anticipated
in answer to the question. But on any view of the material in the notice and the
bulletin it is clear that contractors were informed that budgetary limits could
affect the works instructed, and that the range of values per annum projected
for the relevant unit was from £16M to £26M.
[11] Regulation 20 of the 1991 Regulations provides, so far as material:
"(1) ... [A] contracting authority shall award a public works contract on the
basis of the offer which-
(a) offers the lowest price, or
(b) is the most economically advantageous to the contracting
authority.
(2) The criteria which a contracting authority may use to determine that an
offer is the most economically advantageous include price, period for
completion, running costs, profitability and technical merit.
(3) Where a contracting authority intends to award a public works contract on
the basis of the offer which is the most economically advantageous it shall
state the criteria on which it intends to base its decision, where possible in
descending order of importance, in the contract notice or in the contract
documents."
It was common ground that the first respondents had indicated their intention
to award the contract on the basis of the most economically advantageous test.
[12] It was agreed that the Directive has direct effect: Gebroeders
Beentjes BV v The Netherlands (1988) E.C.R.4635. But parties
presented much of the argument with reference to the domestic regulation. For
the petitioners, Mr Glennie argued that the principal purpose of the regulatory
scheme, as reflected in the preamble to the 1993 Directive, so far as material
for present purposes, was to ensure that the procedures devised for the conduct
of tendering exercises for relevant contracts and for the assessment of
competing tenders provided for the equal treatment of competing tenderers,
objectivity, the elimination of arbitrary choice and subjective assessment
factors, and transparency. From the Beentjes case it appeared clearly
that while the factors mentioned in Regulation 20 paragraph (1) (b) were not
exhaustive, the various criteria which an awarding authority might apply, and
state that they intended to apply, were limited to the identification of the
economic advantage offered by competing tenders: page 4657 paragraph 19. The
court's opinion reflected the views of Advocate General Darmon at page 4649 that
the criteria must share a common factor: they must concern the nature of the
work to be carried out or the manner of execution of that work to the exclusion
of considerations personal to the contractor. The requirement to ensure the
equal treatment of tenderers was vouched by The Commission v Kingdom
of Denmark (1993) E.C.R. 3353, page 3393 paragraph 33 and page 3394
paragraph 37. There was an obligation to ensure transparency: The Commission
v Kingdom of Belgium (1995) E.C.R. 2943. Though that case related to
a different Directive it was instructive of a general principle. It was held
that a contracting entity had to comply at every stage of comparing tenders with
the principle of equal treatment of tenderers and the principle of transparency.
At page 2093, paragraph 88 it is stated, in relation to the regulation in
question:
"The requirement .. for the contracting entities to state 'in the contract
documents or in the tender notice all the criteria they intend to apply to the
award, where possible in descending order of importance' is intended precisely
to inform potential tenderers of the features to be taken into account in
identifying the economically most advantageous offer. All the tenderers are thus
aware of the award criteria. Moreover, that requirement ensures the observance
of the principles of equal treatment and of transparency."
[13] Against the background of these general observations on the
interpretation of the provisions, Mr Glennie argued that while, in some cases,
there might be room for variation in contract provisions or the scope of work at
a later stage, where a contracting authority intended to apply Regulation 20 (1)
(b) in assessing tenders the relevant assessment criteria had to be made known
to tenderers in the official notice or in the tender documents. Tenders were
time consuming and expensive documents to prepare, and tenderers had to be
informed what was required of them. Regulation 20 identified certain
criteria which might be applied, but the list was not exhaustive. Other criteria
might be selected provided that they shared the common feature that they
referred to the offer and not to the personal characteristics of the offeror.
The factors must be objective. A wide discretion in selection was not valid. The
criteria had to be specified in the relevant documents. If they were not they
could not be relied on. There had to be transparency. The objective character of
the criteria had to be clear from their terms. Where the expressed criteria were
capable of being construed as containing subjective elements it was always
possible for the authority to assert that nevertheless they had been applied in
an objective way. That assertion was very difficult to disprove. The purpose of
the regulatory scheme was to avoid that difficulty and to ensure that the court
tested the procedures by reference to the terms of the relevant documents. If on
a proper construction those documents allowed arbitrary choice, or if a decision
could be taken on a basis that was not objective, the procedures were defective
and they must be set aside even if it might established on full proof that there
had been no discrimination. If that were not so the policy of the regulations
would be frustrated. He referred to The Commission v Kingdom of
Belgium at page 2093 paragraphs 88 and 89. In this case there was failure to
specify the base data at all. The specification of the sensitivity percentages
in clause 4.2.2. was insufficient to provide an objective standard. In any event
the specification of sensitivity adjustment values made no sense without
specification of the basic data to which they were to be applied. If there were
inadequacies in the specification of the criteria, the lowest price tendered
ruled: R v Portsmouth City Council (1997) 9 Admin. Law Reports
535. The material provided in the information pack showed levels of expenditure.
Men of skill could use such information to form views of the likely quantities
of work involved. The petitioners had been involved in the work and could make
such assessments as could other tenderers. The first respondents should be in
the same position. But the consultation and assessment processes were obscure.
If quality aspects were taken into account in the assessment one could not know
how that aspect of the assessment was done. Clause 3.6.7 mentioned without
specifying any order of importance a number of qualitative factors. It appeared
to be an irrational attempt to meet minimum requirements in an area in which
there would inevitably be differences between competing tenderers. At the end of
the day the awarding authority would know the approach it had adopted, but the
tenderers would not. If the exercise were truly based on an objective analysis
and comparison of cost data it was difficult to understand how these factors
could be accommodated. The estimate of the quantities in this case was material.
The preliminaries section of the schedule was restricted to four heads. Many of
the items usually found in preliminaries in similar contracts had to be
recovered by contractors through the tender rates. Knowledge of quantities was
therefore essential. It was accepted that any tenderer would have appreciated
that quantitative data was not going to be provided until after tenders were
lodged, and that at the assessment stage disclosure of base data satisfied, to
that extent, the requirement of transparency. But it was all the more important
that tenderers should be able to gauge in advance, using their best endeavours,
the quantities likely to be used by the first respondents. The tenderer was
entitled to expect that the values introduced by the first respondents into the
assessment exercise would reflect the sort of values that could reasonably be
deduced from the information provided by them to contractors. If it were
possible for tenderers who gauged quantities in a reasonable and skilled fashion
from the information provided to arrive at values which were wholly out of line
with those used by the first respondents that demonstrated that the process was
skewed, and that the tendering process could not be wholly objective, and was
useless. If the quantities used in the assessment were out of line with the
reasonable contemplation of all tenderers that would inevitably be a distorting
factor. It could not be said by the petitioners that the base values for
assessment were so out of line with reality that they could never be justified.
But there was a narrower basis of attack. The petitioners were entitled to have
had a reasonable expectation that the quantities would not be significantly out
of line with the basis of the tender. A reasonable relationship was necessary if
the public policy objective of furthering competitiveness were to be served. If
the awarding authority judged tenders by different yardsticks from those
advertised, the result would be that the tenders were not compared on a fair
basis, and the process would be arbitrary. The primary exercise in clause 4.2.1
arrived at a price for the base quantities. Most of the criteria specified had
no place in that exercise, and could have no bearing on the assessment of value.
The economic advantage of the tenders was to be related only to the application
to the base quantities of the quoted prices. Although those base quantities were
not identified as a criterion, they were the most significant factor in the
exercise. The tenderers could not assess the role of the base quantities without
knowing the values the first respondents would apply. Moving on to the second
stage, the document did not indicate how the sensitivity adjustment was to be
carried out. There was no indication that there would be a uniform application
of any one percentage variation. Within the permitted range there could be
different variations for different items. There was a potential for
arbitrariness inherent in the procedure. To be acceptable the criteria had to be
pre-determined and specified in the tender documents. There was no indication
whatsoever how the weighting procedure was to be carried out. There was no
objective criterion by reference to which the adjustment could be made. The
procedure permitted a wholly subjective assessment to be made: the choice of
values could be wholly arbitrary. Uncontrolled choice was necessarily arbitrary.
The figures could be manipulated to achieve a subjectively desirable result. The
final over-riding discretionary power to reject a tender appeared to bite at the
whole assessment procedure. One was entitled to wonder why there was such a
number of control mechanisms. In combination they clearly gave rise to the risk
of arbitrariness. Every stated criterion had to be taken into account. In this
case it appeared that having stated certain qualitative criteria, the first
respondents finally made an assessment exclusively on price alone. On the
application of the statutory material, the petitioners' arguments were: (1) the
failure to specify the base quantities which were in fact used and intended to
be used as assessment criteria was a fatal omission: sensitivity was clearly a
criterion, and it could not fulfill that role unless the data to which it
applied were similarly a criterion; (2) there was the potential for arbitrary
choice inherent in the selection and application of sensitivity factors; and (3)
the weighting exercise was wholly unconstrained by any advertised values or
range of values and was therefore wholly arbitrary. The procedures infringed the
regulations accordingly.
[14] In addition to his primary argument, Mr Glennie submitted that a
decision to award a contract on an assessment of tenders in pursuance of the
tender procedures on a basis wholly inconsistent with the reasonable
understanding of the information provided to tenderers would be irrational in
the Wednesbury sense, and would be contrary to the legitimate
expectations of the petitioners. He referred to the formulations of principle in
Council of Civil Service Unions v Minister for the Civil Service
[1985] AC 374; the opinion of Simon Brown L.J. in R v Devon County
Council ex parte Baker [1995] 1 All ER 73 and Stannifer v
Glasgow Development Agency 1999 S.C. 156. The factual basis of the
argument was substantially the same as that relied on in relation to the
argument based on the regulations. The point was self-explanatory. The
procedures adopted applied to all tenderers equally. But that did not
demonstrate that they were fair. To apply a quantitative analysis that had not
been communicated to tenderers was unfair and irrational. Further it was
contrary to the petitioners' legitimate expectations. The discrete problem was
not apparent until the base quantities selected by the first respondents had
been intimated and analysed by the petitioners. The consultation process
aggravated the problem. It was obvious that the process involved the application
of different qualitative factors as among the contending tenderers. But to what
effect these differences tended it was impossible to say. Cross-fertilisation
could not be ruled out. One could not argue that there should not be discussion,
nor that the commercial confidentiality of the individual tenderers should not
be respected. But the end product of the assessment exercise was of necessity a
money-based comparison. One could not ascertain from that the role played by
qualitative factors emerging in the course of the consultation process. Properly
construed, what one had in clause 4 of the tender instructions paid lip service
to the requirements of the regulatory scheme. But the stipulations had no
rational relationship to the assessment exercise. The petitioners were entitled
to a remedy on this basis also.
[15] For the first respondents Mr Anderson submitted that the petition should
be dismissed as irrelevant. The petitioners had failed, in averment and in
argument, to identify any basis on which the supervisory jurisdiction of the
court could be invoked. There was no warrant for the remedies sought. So far as
the background facts were concerned, the change in the system of letting the
contracts was relevant to the petitioners' complaint about the provision of
quantitative information. The first respondents did not have comprehensive
quantitative data. Where local authorities' direct labour organisations had
acted as managing agents the work was carried out on a reimbursement basis by
reference to demonstrable cost. The first respondents and the tenderers alike
had to make assessments on the basis of the financial records. About 99% of the
listed items, approximating to 74% in value, were variable. The procedures
adopted following public notice resulted in a short list of contractors who were
invited to tender. The list was issued on 30 May 2000. The dates for tendering
and for the issue of base quantities were postponed from the original intention,
but at every stage it was plain that the two dates were to be the same, and that
tenderers would not receive information about the base quantities until tenders
had been submitted. It followed that all tenderers required to make their own
assessment of quantities for estimating purposes. The consultation process
allowed for the qualitative assessment of contractors' proposals. It was for
contractors to fix rates having regard to their own estimates. It was an
essential part of the petitioners' argument that their ignorance of the first
respondents' estimates of quantities vitiated the tendering process. That was a
fallacy. It was unnecessary to have that information. The petitioners were in
fact able to tender, and did so. To complete that step the petitioners, on their
own approach, must have made an estimate of quantities. In any event it was not
unknown for tenderers to submit rates offers without any knowledge of
quantities. The work required in the case of this contract, over a period of
five years, comprised some work which was inevitable and some which would depend
on casual factors. Where work was inevitable and could be predicted with
certainty fixed monthly rates were paid, whether the work was carried out or
not. But the historical record could not be a wholly reliable guide to the need
for future work of the variable kind. Parties' experts could be expected to have
a reasonably good idea of the likely range of values, but there would inevitably
be a broad band of probabilities, and in the case of some items the band might
be very broad indeed. Neither the respondents nor the tenderers could predict
with accuracy the scope of work over a future period of five years. The
estimates possible were neither predictions nor guarantees of actual levels of
work. The tendering process was competitive. The first respondents had to assess
the competing tenders by measuring the application of their rates to an estimate
of quantities which their experts made on all available data. For the
petitioners to undermine the first respondents' estimates it would have been
necessary to do much more than select a few examples of inconsistencies between
their estimate and the first respondents', and to demonstrate some structural
defect, or defect of computational or other approach. On any view much more
specification would have been required than the petitioners offered. There was
no basis for argument that the base quantities applied by the first respondents
presented such a radically different picture from that which might reasonably
have been anticipated that they could be said to be irrational. There was no
prima facie case for review. The tender form was not designed to produce a
contract price. The application of base quantities was simply a mechanism for
converting rates into a money sum for comparison purposes. The first respondents
made their estimate using precisely the same information as had been made
available to tenderers. Each tenderer was dealt with in the same way. They were
dealt with in a pre-determined manner previously intimated to them. The
intimation of the base quantities after receipt of the tenders ensured that
there was no question of abuse, no arbitrariness, and no subjective response to
contractors' tenders. Tenderers had to submit their tenders in hard copy and
CD-ROM. The digital form was fed into computer without human examination of the
tenderers' rates, the base quantities were applied, and the sum of the products
was produced electronically. The sensitivities were applied similarly, applying
percentage additions and subtractions to the variable elements on a consistent
basis. There was a tender evaluation panel which was required to follow a
predetermined set of instructions. The process resulted in three sums, one at
each extreme of the permitted range of sensitivity adjustments, and the initial
calculation on base quantities. The process of weighting and aggregation then
followed. The important characteristics of weighting were that the values were
pre-determined and that they were applied uniformly. The base quantities
themselves were estimated having regard to the projected budget for the class of
work, and reflected a reasonable allocation across the series and individual
items of work likely to be required of the funds likely to be available. The
sensitivities related to the range of budget variations which might be
experienced in events yet to happen, having regard to the probabilities. The
weightings reflected the probability of the budget allocation being at the low
end, median level or high end of the probable range. The scheme represented a
rational method of reflecting the realities of projection in a context of
governmental budgetary control. The contractors were informed that budgetary
constraints would be a factor. The scheme was not straightforward, but it was
pre-determined and it was applied to all alike. Elements of the scheme, and in
particular the application of the sensitivity factors, were familiar to the
petitioners in particular from previous experience. The first respondents took
no issue with Mr Glennie's analysis of the European authorities. The
approach adopted by the first respondents reflected his analysis. The first
respondents had applied and complied with regulation 20 (3), the primary
mandatory requirement. The petitioners' complaint that the absence of
specification of base quantities demonstrated lack of an essential assessment
criterion was a mis-construction of the provisions of the tender documents. It
was abundantly clear what the tender required to include and provide for, and
how the first respondents would proceed to make the assessment. The central role
of the schedule of rates would have been obvious to any contractor. The drafting
of the document was not perfect, but there was no room for substantial doubt
about any material factor. One must give the document a sensitive and purposive
construction. It was known that at the tender consultations minimum thresholds
were discussed so that all tenderers could proceed on the same understanding of
the qualitative requirements of clause 4.2.1. It was fanciful to contend that
the base quantities were a criterion that had to be expressed in order to be
taken into account. The tenderers were given, in very large measure, fair notice
of how their tenders would be treated. There might be a question why they were
given so much information. But the first respondents were under an obligation to
publish the results of the process inter alia to explain to any
tenderer who failed how the most economically advantageous tender had been
identified. The purpose of the regulations was to ensure that all tenderers were
treated equally, and that the assessment was made on an objective non-arbitrary
basis. Any suggestion that the process was arbitrary, that is not bound by
rules, was quite contrary to the facts. The procedure was hide-bound by rules of
some complexity. There was no subjective or arbitrary element in the procedure.
It would be difficult to imagine a more objective factor than a price calculated
as in this case. The petitioners' complaint might have had some substance if one
had been dealing with priced bills. But there was no question of pricing a
product. The tendering process was aimed simply at providing a controlled
competition among prospective tenderers. There was no question of arbitrariness
in determining the base quantities. The first respondents had regard to the
information provided to tenderers, analysed each series by value over the
four-year reference period, grossed the result up for a five year period
arithmetically, expressed the values by quantity, using professional skill and
expertise, and extrapolated the resulting values forward in light of the
budgetary constraints likely to apply. Their position was substantially the same
as the petitioners. Whatever view one might take of the failure to issue base
values at an earlier stage in the process, it could not be said to be an
arbitrary step. Nor could it vitiate the process, nor amount to a breach of
regulation 20. The petitioners' averments were clearly inaccurate. They
were well aware of the range of quantities of work likely to be required. They
had the advantage over other tenderers that they had carried out work in the
reference period as agents for the first respondents. The averments of radical
differences from their expectations related to four items from thousands. No
general conclusion could be drawn from them. Further the averments were of
differences from what the petitioners anticipated. There was no suggestion that
the first respondents' assessments were not within the band of values that a
reasonably competent and careful professional assessment might have identified
from the information available. The averments were lacking in clarity. The
petitioners referred to budget values without disclosing what budget was in
contemplation. They founded on alleged differences in winter maintenance and
landscaping which were fixed items, not variable items, and which were not
within the scope of the general complaint founded on. The only one of the four
particular complaints which did fall within the scope of the general complaint
was pavements. It was impossible to support the general complaint by reference
to a single item. The petitioners were simply disappointed tenderers, who had
failed to structure their tender on the information made available to best
advantage, and apprehended that they would not be awarded the contract. The
complaint about sensitivity adjustments was patently without merit. The first
respondents had used the same method in the previous round of tendering, as was
plain from the opinion of Lord Cameron of Lochbroom in petition Tay Premiuim
Unit Consortium, unreported, 20 October 1995. The petitioners had taken part
in that round and were familiar with the process. There was no positive
obligation on the first respondents to set out so much detail in any event. None
of the authorities required the first respondents to disclose the mechanisms of
assessment they intended to adopt. The first respondents acknowledged an
obligation of transparency, but that was not synonymous with an obligation to
reveal the arithmetical mechanisms they intended to use. On the authorities they
had disclosed more than required rather than less. Contractor confidentiality
would be destroyed by disclosure of the mechanical detail of the assessment
process. What had to be disclosed was sufficient information to comply with the
regulations. It was clear from Beentjes at page 4657 paragraph 19 that
contracting authorities required to make clear that the criteria were related to
the contract works. The criteria had to be objective and neither subjective nor
arbitrary. It could not be said that there had been any breach of regulation in
this case. The first respondents had bent over backwards to demonstrate that
their approach would follow prescribed rules. The requirement of transparency
had been met by providing open notice of the approach to be adopted. There was
no relevant case of infringement of the principles of Wednesbury
fairness. Finally, the first respondents contended that the petition came too
late. Regulation 31 (5) imposed a time limit of three months from discovery of
the basis of complaint. The petitioners' principal complaints related to the
terms of the documents which had been issued to them in April 2000
[16] For the third respondents, Mr Cullen adopted the arguments advanced by
Mr Anderson, and added independent submissions. He argued that the
petitioners' averments were irrelevant. They reflected an error of approach to
Community law. The domestic regulation had faithfully implemented the Directive.
The court was bound to follow and apply Court of Justice decisions on the
meaning and scope of the Directive. On a proper view of the requirements of the
European jurisprudence there was no relevant basis for the petitioners'
complaint. The recitals in the 1993 Directive demonstrated that the Directive
had no impact on the choice of form of contract. That was left to national
authorities. In essence the petitioners' complaints related to the form of the
contract documents and were unrelated to the objectives the Directive was
designed to secure. Beentjes explained clearly the policy of the
Directive. The competitive assessment of contracts was permitted provided that
an objective system was adopted: paragraphs 35 - 38 of the Advocate General's
opinion; paragraphs 15 and 27 of the Court's opinion. The emphasis was on the
objective assessment of the provisions of the contract and how it was intended
to be carried out rather than on the particular contractors. The test for a
national court was whether the policy objectives of the Directive had been
satisfied. In this case there had been equal treatment of all tenderers. The
objective of the promotion of competition was satisfied. The petitioners'
criticisms depended on reading far more into the Directive than the language and
the authorities permitted. The Directive was not concerned with the form and
terms of contract, which were left to national states. Whatever detailed
criticisms might be made about such matters, whatever inconsistencies of
language might be highlighted, such matters were exclusively for domestic law:
the Directive was not relevant. The Directive was concerned only with the treaty
objectives of freedom of establishment and effectiveness of competition. In
regard to those matters the first respondents' procedures complied. A complaint
that the application of base quantities was unfair could not be brought
relevantly within the scope of the objectives. The objections to the application
of sensitivity factors and weighting were even further removed from the scope of
the Directive. Mr Cullen contended that the petition set out a multiplicity of
complaints which lacked logical consistency. It appeared that the pleader had
cast around diffusely and picked up any conceivable basis for criticism.
Properly understood the petition complained that the first respondents were not
entitled to enter into a contract using the procedures they had adopted. It
appeared that the petitioners contended that unless the quantities were
disclosed at the outset the procedures could not satisfy the regulations. There
was no relevant basis for such a contention. The very diffuse nature of the
approach was a sign of weakness. As one saw from Stannifer the court
should be very wary of this type of complaint from a disappointed or disaffected
tenderer. Mr Cullen made a detailed analysis of the averments to highlight his
criticism that there was simply an aggregation of diffuse and irrelevant
material lacking rigorous analysis, and characteristic of a weak and
insubstantial case. There was no obligation in the Directive to state the base
quantities in the contract documents. Whether such a mechanism was to be used or
not, in determining whether there had been a breach of the regulatory code what
one had to do was to consider the terms of the rules. The only obligation
incumbent on a contracting authority was to state the criteria by which the
assessment was to be made. The authority was not obliged to set out the
mechanisms. So far as arbitrariness was concerned, there was, in fact, no
allegation of any arbitrary exercise of power. What was said was that on a
construction of the documents there was a potential for arbitrary decision. That
was no more than a statement of a theoretical possibility. It was irrelevant
that the expression of terms might allow an arbitrary exercise of power. What
would be required would be a positive averment of arbitrary action. The
petitioners clearly could not make such an averment or advance such an argument.
The complaints about the application of quantity sensitivities and weighting
merely demonstrated that these were pre-determined, and forecast, steps which
were carried out in a uniform and equal way. This was the antithesis of an
arbitrary exercise. The petitioners had failed to identify any breach of any
provision of the regulatory scheme. Further the petitioners' reliance on a
discrete principle or requirement for transparency was misconceived. There was
no such principle or requirement in the 1993 Directive. The Kingdom of
Belgium case related to a different Directive which made express provision
for an obligation to demonstrate a minimum level of transparency. The
observations of the Court of Justice had to be understood in context. There was
nothing to support the generality of the obligation founded on in this case. So
far as the common law case was concerned, the petitioners had failed to make out
any case based on legitimate expectation. Further in argument the petitioners
had given no content to the term "transparency". It was for the petitioners to
explain what criteria of transparency they relied on as a measure of the first
respondents' obligation, and to spell out the respects in which the conduct of
the first respondents failed to meet their international obligations. A
comparison of the two relevant directives showed that there was no legislative
basis for an obligation of transparency in this case. If there were a principle
of transparency, the petitioners had to explain its content. It appeared that
the petitioners considered that transparency was bound up with the tender
appraisal procedure. But that was outwith the scope of the Directive objectives.
There was no measure of any obligation of the first respondents to disclose the
detail of their procedures. There were no clear limits to the idea relied on. In
the Kingdom of Belgium case the transparency required was of very limited
extent: page 2093 paragraphs 88-89. It extended to the disclosure of criteria,
not the mechanics of assessment by reference to such criteria. This court should
be cautious in relying on observations in a case which could so readily be
distinguished. None of the other cases referred to supported a general and wide
ranging obligation of transparency such as the petitioners required to support
their case. The petitioners' common law case was fundamentally irrelevant. There
was no rule requiring authorities to act fairly in their commercial dealings. Mr
Cullen discussed the case of Stannifer and submitted that in the absence
of a positive rule requiring authorities to act fairly in commercial relations
with third parties a case based on legitimate expectation required specific
averments of the basis on which the independent obligation arose. There was no
general duty to act fairly. The petitioners had failed in averment and argument
to make out any basis for an independent obligation in this case. The petition
should be dismissed.
[17] A proper understanding of the factual background and of the framework of
the tender documents is essential in disposing of the issues before me. The
debate of necessity took place on incomplete pleadings, and perhaps reflected at
some stages an incomplete understanding of the facts. It is necessary to set out
at the outset of the discussion of the arguments what I understand the position
to be so that parties have a proper basis for consideration of the views I have
reached on the law, and, if necessary, preparing a more comprehensive or
corrected factual picture before any further proceedings in the case. It was
clear that the contracting authority might adopt any one of a range of solutions
in constructing a tender package for a contract for future trunk roads
maintenance work. In the nature of things the scope of the work cannot be
forecast precisely. There are certain items which can be predicted, because the
content of the work can be prescribed by reference to factors other than
emerging need. One can require verges to be cut at specified intervals during
growing seasons. One can require drains to be cleaned at specified intervals
according to season throughout the year. But the need for carriageway repair is
likely to depend on a range of factors, including the effectiveness of the
original construction, the suitability of the materials used, the effects of
weather and the impact of traffic, and so on, which in combination make the
precise scope of the work casual rather than certain or predictable.
[18] In such circumstances a contracting authority cannot reasonably be
criticised for avoiding the prescription of quantities as a factor in inviting a
tender for rates. Mr Anderson was, in my view, correct to emphasise that
this was not a tendering process aimed at producing a contract price for
specified work. It requires little imagination to anticipate the scope for
disputes about the continued validity of rates in changed circumstances if the
authority were to attempt such an exercise in an area which was so wholly
unpredictable. On the other hand, there is little difficulty in understanding
the wish of a contractor for some measure of anticipated quantities as a basis
for estimating rates. The recovery of overheads and the generation of profit are
major considerations in deciding the balance of rates within a tender, and in
pricing individual items. A contractor who must use capital plant to perform
particular operations but who cannot be assured of sufficient work of the
relevant class to ensure recovery of depreciation from that class of work must
include some element of that charge in his general rates. Forecast of likely
quantities across the tender creates risk for the contractor. A contractor faced
with a description of works without quantities and an invitation to tender rates
may reject the invitation or load all rates to compensate for the risk. Inviting
quotations and quoting rates for unquantified work exposes the employer and the
contractor to risk. But that is of the essence of the commercial process. Where
there are several tenderers all parties are necessarily engaged in a competitive
process in which professional and commercial judgment contribute to the solution
proposed by each tenderer and evaluated by the prospective employer. The final
paragraph of clause 4.2.2.makes it quite clear that the first respondents
appreciated that whatever the mechanics employed in arithmetical assessment of
tenders situations could arise in which a particular tenderer's solution
involved disproportionate risk for the employer even where on all of the
arithmetical tests the relevant tender appeared to offer best economic
advantage.
[19] Against this background, and before considering the European authorities
and the regulatory framework, there is a preliminary question, whether there is
anything obviously or inherently wrong in a prospective employer inviting
tenders which require the competing tenderers to make their own assessments, on
a common pool of information, of the likely work content of variable items
within the description of works in deciding on the balance and amount of their
rates. I understand at least some of the risks this creates for the tenderers.
But I cannot identify any inherent unfairness or illegality in the procedure as
a matter of domestic contract law. Next, it appears to me to make no difference
that the prospective employer reserves to himself the right to make an
independent assessment of the quantities likely to be involved, and to use that
assessment in weighing the attractiveness of competing tenders. It is almost
inevitable that the employer must make such an assessment. The alternative would
be that the competing tenderers' assessments, individually or collectively or by
some arithmetical process, would come to dictate an important factor in the
competition. It is not usually wise to allow the players to dictate the rules of
the game. Premature disclosure of the employer's assessment could easily distort
the competition. Looking at the background, therefore, in a purely domestic
context, there is no obvious ground for criticism of the general structure
employed in this case. I shall return to the petitioners' common law case later.
But I have formed these general views with that in mind as well as the arguments
under the regulations.
[20] These views are wholly consistent with the attitudes adopted by the
tenderers in this case. The petitioners and the third respondents lodged
tenders. There was no objection to the structure of the tender documents nor to
the procedures set out. It was not stated at any time prior to the written
notice of these proceedings that there was any difficulty in completing tenders
or in making the necessary estimates of the likely pattern of work or of the
quantities necessarily assumed to enable a rational decision to be reached on
the individual rates or on the balance within the tender.
[21] Turning to the tender documents, it is plain that there are a number of
criticisms that might reasonably be made. The interpretation of section 4 is
central to the dispute, and there are a number of observations to be made in
respect of the clause. It is, in my opinion, plain from the terms of clauses
3.7.3 and 4.1.3 that it was at all times the intention of the first respondents,
clearly focused in the tender documents, that there should be no disclosure to
competing tenderers of the quantities of work which might be comprised in
individual work units or series of units, in the view of the first respondents,
before tenders were completed and submitted. Until that stage, tenderers were to
be dependent on their own skill and experience in forming views about the
balance within the several classes of work involved. Secondly, it is plain that
the first respondents intended to use base quantities, in the terms to be
intimated to the tenderers on the date or dates identified in terms of clause
4.1.3., as part of the process of assessment of competing tenders. Any
reasonably experienced and skilled contractor would have understood from these
provisions that the assessment procedure would involve the application of the
rates submitted in his tender to base quantities identified for each relevant
head of work by the first respondents. It would have been obvious that one
result of that exercise would have been a series of products which by addition
would have produced a sum which could be represented as a price for those
quantities of work at the contractor's rates, but which could be different, at
least within certain parameters, from the price which would have emerged from a
calculation which used only the rates and the contractor's own estimate of the
likely quantities.
[22] The express provisions of clause 4.2.1. provide a vocabulary to express
the initial assessment process. The arithmetical process is unduly complicated
by the aggregation of financial and non-financial factors in the listing of the
assessment criteria. It is not at all clear how one would apply non-financial
criteria "to" the base quantities to arrive at an overall cost of tender sum.
Apart from appendix E to the Form of Tender, the scope for arithmetical
correlation of the assessment criteria and any money sum reflecting the tender
cost is difficult to understand or express. But the obscurity does not appear to
me to be of central importance. On Mr Anderson's account of events it may not
been a real issue in any event. But apart from drawing attention to the
conceptual difficulty, the petitioners have not specified any complaint about
the actual process, and have not identified any step which might have been taken
in fact in making the assessment which could be open to criticism.
[23] Having made provisions for ascertaining the "overall comparative cost"
of the tenders, the clause proceeds to identify the lowest sum as the most
economically advantageous tender. Having regard to the terms of clause 4.1.2 one
might have expected that to be the end of the exercise. But, somewhat
illogically, the document proceeds to consider whether the lowest "comparative
cost" (not apparently the "overall comparative cost") of tender would remain the
same after adjustment. There is an unfortunate change of terminology. Clause
4.2.1. does not use the expression "comparative cost of Tender" which is assumed
in clause 4.2.2. It refers to a value described as the "overall comparative cost
of Tender" which is only picked up again at the end of clause 4.2.2 where
substituted values are provided for that expression. But despite the inelegance
of the result, I consider that the scheme of the provisions is reasonably clear.
The values first brought out are subjected to a process of adjustment to
ascertain the effect of varying the quantitative data for variable items within
specified parameters. The basis on which the parameters had been selected is not
specified. There is an obscure provision (which I have not quoted) relating to
part of this exercise which was not explained, but no party relied on it as a
ground of criticism.
[24] The result of the adjustment exercise is then to be assessed by
weighting the values brought out, and the sum of the several costs is expressed
as the new "overall comparative cost of Tender". This is, on any view, a
peculiar use of language, since the sum of a number of values each of which
results from costing the works can hardly in common parlance be described in any
sense as a cost of tender. However, I have come to the conclusion that the
obvious difficulties arise from the application of what, in other circumstances,
would be readily understood language to wholly artificial figures, which in
themselves are readily understood, and that the obscurities disappear when one
analyses out the steps required to enable the arithmetical comparison to be
completed.
[25] In summary, the adjustment exercise involves two distinct steps. Within
the overall range of parameters specified, the first respondents intimated an
intention to compute values for the works at the contractors' specified rates
for adjusted volumes of work within the specified groups or series. There was
then to be a weighting of the results, which might involve two, three or more
calculations, on an unspecified basis selected by the first respondents. The
resulting weighted values were to be aggregated and compared. The aggregates
were artificially defined as a tender sum, which they could never be, but their
sole function was to allow a comparison which took account of the effect of
varying the quantitative data. That allowed the balance within competing tenders
to be tested. So far there is no irrationality in the process. It is
understandable that different contractors might differ in the balance struck by
them in pricing a tender between different groups of items according to their
understanding of the work involved, their individual capacities to perform the
work, and other factors, some of which might reflect their understanding of
where profit might be earned.
[26] As already mentioned the final provision of clause 4.2.2. reflected the
risk to the employer of the last point. A contractor might so distort the
balance of pricing of individual items that, even though his tender resulted in
the lowest price on any particular valuation, or in the aggregate, a careful
employer would notice that the outcome of applying the distorted rates in
foreseeable events might be a higher cost overall. The problem is more easily
understood in cases of full bills of quantities where rates for small items, or
allowances, might in the out-turn wholly distort the contract price. A
contractor who has knowledge of a site may know that the quantities used in the
bill are unlikely to be reflected in the execution of the contract. A rate
selected to meet the quantity surveyor's estimate, and apparently reasonable,
may be thought grossly excessive when it emerges that the actual volume is many
times greater. The provision is perfectly intelligible.
[27] It would be impossible for any contractor reading the provisions,
however, to forecast what values the first respondents would apply at any stage
of the adjustment exercise, either in adjusting for the "sensitivities", or in
selecting appropriate weightings. Further, as a matter of language, the first
respondents would be under no obligation to apply the same percentage
adjustments throughout the exercise. On the language of clause 4.2.2. the first
respondents might have applied positive percentage adjustments to some series or
items within the same series, and negative percentage adjustment to others. The
final power of rejection of distorted pricing structures is not qualified by any
arithmetical factor, nor made a function of any test other than the first
respondents' judgment. The successful tenderer and the first respondents may
find some of these provisions to be the source of difficulty or conflict in the
course of carrying out the works. It is not of any moment for present purposes.
It is on no view a requirement of the regulations, nor of procedural fairness in
the sense of the domestic authorities, that contract documents be elegant or
even readily intelligible.
[28] So far as the regulatory scheme is concerned, the first question is
whether there has been any failure in implementing the requirements of
regulation 20. That there has been less than comprehensive disclosure of the
precise arithmetic of the assessment procedure is clear. Without knowledge of
the values to be adopted for the base quantities, or the approach to be adopted
to the sensitivity adjustments, or the values to be applied in weighting, there
could not be such a disclosure. But, in my view, Mr Cullen was correct in his
contentions that that was not what the regulatory scheme sought to ensure. The
primary requirements of a valid contractual scheme, as identified in paragraphs
18 and 19 of the Beentjes judgment are that the requirements to be
applied are restricted to requirements aimed at identifying the offer which is
economically the most advantageous. Provided that contracting authorities
restrict their requirements to criteria having that characteristic, the scope
and definition of the requirements are matters for the national authority within
the framework of contract law available to it. As it stated in paragraph 20 of
the judgment:
"Furthermore the directive does not lay down a uniform and exhaustive body of
Community rules; within the framework of the common rules which it contains, the
Member States remain free to maintain and adopt substantive and procedural rules
in regard to public works contracts on condition that they comply with all the
relevant provisions of Community Law..."
[29] There has clearly been no failure to ensure freedom to enter the
competition. There has been no criticism of the official notice in the Journal.
In my opinion, there has been no relevant attack on the steps taken to ensure
effective competition, in the context of the rules. There has clearly been
equality in treatment. The most substantial issue raised by Mr Glennie, in my
view, was whether, having regard to the obscurity of the provisions, and the
lack of information about base quantities and the limiting values in the
adjustment process (in the case of weighting) and the uncertainty of application
of the sensitivity adjustments, there could not be effective competition.
As a matter of language at least, there was force in his submission that
there was not effective competition where determinative values were undisclosed
and unknown and could be selected without prior disclosure. As he said, that
process could be said to be by definition arbitrary. In terms of analysis of the
tender documents, there is substance in that criticism. But in the circumstance
of this case its weight is undermined by two significant factors. In the first
place the petitioners acknowledge that they cannot criticise the values adopted
by the first respondents as being outwith the range of values that might be
selected on a reasonably competent assessment of the probabilities by skilled
and experienced people knowledgeable of the business. Secondly, the petitioners
have identified as open to criticism on their own approach a very small number
of items, only two of which are within the variable class. Quite apart from the
fallacy inherent in this approach as a matter of traditional formal logic, it is
not contended that the examples selected for attack can properly be said to be
typical of the assessment as a whole. Nor is it said, in averment or argument,
that the examples illustrate a general error of approach or of principle which
undermines the whole exercise. In my view the respondents have correctly argued
that the material averments, given specification in the petitioners' note of
adjustments, are irrelevant.
[30] Further, although as a matter of construction it is possible to identify
scope for purely arbitrary factors to enter into the adjustment process, there
is no basis in averment or argument for suggesting that that has at any time
been more than a theoretical possibility either in absolute terms, or in terms
of altering the balance among tenderers within the process. The adjustment for
sensitivities, on the narrative for the first respondents, amounted to no more
than a uniform adjustment of variable items to reflect the likely range of sums
of money available within the first respondents' budget. The information was
disappointing, since the provision would on any view have allowed for a much
more imaginative exercise, on the one hand, and, on the other, if that had been
the extent of the intention it could have been expressed with rather less
mystery and rather more clarity. But, once explained, and in the absence of
challenge, the exercise simply reflected the common sense fact, anticipated in
the official notice and intimated in the bulletin, that greater or lesser budget
allocations would influence the amount of variable work that could be done
during the contract period. There remained more mystery about the weighting.
However, it is understandable that the first respondents would be unwilling to
forecast publicly their estimate of the chances of the roads budget being
increased or decreased over the next five years. Acknowledging such a
possibility is a fact of political life. Putting a figure on the prospects might
risk offering a hostage to fortune in the political arena and be a step which
the first respondents could be required to take, if at all, only in a political
forum. Nothing was said to give substance to any suggestion that the first
respondents were in any way affected by subjective considerations relating to
the tenderers or any of them.
[31] The independent argument that the procedures lacked necessary
transparency focuses on a different aspect of the issue. Mr Glennie's contention
that, even if everything was in the event done properly, the procedures lacked
transparency raises, in the first place, a question whether there is an
obligation of transparency. The question is difficult not least because the
first respondents clearly consider that there is such an obligation, and
maintain that they have fulfilled it. The first respondents acknowledged in the
contract documents an obligation to demonstrate transparency: Tender
Instructions clause 4.1.3. It was the third respondents who argued that the
obligation does not exist. The third respondents would be the party most
interested in usual course in asserting and enforcing such an obligation if they
were in the event the successful tenderer. For present purposes, it is
sufficient that the basis of the petitioners' contention, the Kingdom of
Belgium case, was conclusively distinguished by Mr Cullen. Whether there is
an independent obligation to ensure transparency, and what the content of that
obligation might be, as issues logically prior to the question whether there was
any infringement in this case, are matters that were not fully debated before
me. I cannot express any concluded view on the issue. However, to the extent
that there might be such an obligation, for present purposes its scope could not
be wider than disclosure of factors bearing on compliance with primary
obligations under the regulatory scheme. Since in my view no breach of any such
obligation has been made out, either in fact or as a matter of probability or
likelihood, there is no basis in which one could hold rationally that there was
any material failure in ensuring transparency.
[32] Turning to the common law arguments, I refer first to that based on
legitimate expectation. It is clear from the adoption of Simon Brown LJ's
observations by the second division in Stannifer that an independent or
free-standing remedy based on breach of a legitimate expectation of some
procedural practice must be founded on a specific promise or practice or
implication from some established practice. No such promise or practice was
relied on. The factual circumstances on the contrary demonstrated that this was
an unprecedented exercise arising from a new approach to the arrangements for
performance of the first respondents' duties as trunk roads authority, involving
a fresh definition of unit areas, and the first assessment of quantities
overall, as distinct from the previous mixed system of financial control.
Nothing was brought to my attention that would instruct a relevant duty on the
first respondents which they could be said to have infringed.
[33] Stannifer also undermines the case based on Wednesbury
unreasonableness to a considerable extent. It shows that there is in
domestic law no general obligation on a contracting authority to act fairly in
its commercial affairs. The argument in other respects depended on the analysis
of the procedures adopted, and on the contract documents discussed in relation
to the regulatory scheme. As already indicated, I consider that the documents
lack clarity in certain respects. But there is no basis in law for considering
such failures of analysis and draftsmanship to instruct a failure of the kind
which gives rise to a remedy at common law.
[34] In the whole circumstances I consider that the respondents have
demonstrated that the petition is fundamentally irrelevant and that it should be
dismissed. It is therefore unnecessary to consider the first respondents'
argument that the proceedings are out of time. I am of opinion that that issue
is in any event dependent on the view one forms about the significance of the
timing of publication of the base quantities data. But it would be inappropriate
to deal with the issue more fully. It is also unnecessary to hear the parties
further on the reserved matter of remedy. Since I have not heard submissions, I
shall make no comment on that topic.
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